Is land still a solid investment?

In recent weeks we have seen record-setting land sales. RD Schrader, president of Schrader Real Estate says land prices continue to hold steady. But – what about the impact of this year’s drought?

Schrader says – that depends. “The drought had different impacts on different areas,” he says. “Overall – I’m not so sure there hasn’t been more cash that has been injected into the marketplace due to the commodity prices and insurance programs than what may have been projected at the beginning of the year.”

He tells Brownfield with commodity prices at their current levels – the return on investment continues to be strong.

The million dollar question is will that continue? “Nobody has a crystal ball to see what the future holds,” he says. “Basically these prices are the function of expected future earnings – and earnings have been good the past few years. Farmers have made some money and been able to put it back into the land market.” When farmers have cash flow, he notes they tend to invest it back in to land.

The majority of these land purchase, Schrader says, are still being made by farmers.